Gold Price Forecast: XAU/USD defends 200-day SMA at $4,425, but for how long?
- Gold rebounds from weekly lows, but sellers refuse to give up yet amid US-Iran uncertainty.
- The US Dollar retreats alongside Oil prices, following the Israel-Lebanon ceasefire.
- Gold holds the key 200-day SMA support for now, but RSI stays bearish.
Gold is attempting a tepid recovery toward $4,500 early Thursday, as renewed optimism in the Mideast geopolitical front calms market nerves.
Gold sees a dead cat bounce?
This cautious optimism across Asian markets weighs on Oil prices and diminishes the US Dollar’s (USD) safe-haven appeal, helping Gold stage a decent comeback from the weekly low of $4,424.
Even though a lack of clarity prevails on the US-Iran peace deal and the reopening of the Strait of Hormuz, the announcement of the ceasefire agreement between Israel and Lebanon seems enough to offer some relief to traders in the wake of the eruption of hostilities in Gulf earlier this week.
In a joint statement released after a fourth round of US-mediated talks, the US, Israel and Lebanon said the ceasefire “is contingent on a complete cessation of Hezbollah fire and the evacuation of all Hezbollah operatives” from areas south of the Litani River.
That being said, markets are still trading with caution, especially after Iran’s Foreign Minister said late Wednesday that “no tangible progress” had been made in negotiations on ending the war.
His comments came after US President Donald Trump said in a New York Post interview that the blockade lasting until Labor Day is unlikely but possible, effectively extending the market's timeline for a Hormuz reopening.
Therefore, the Greenback’s downside appears limited, which could check the Gold price rebound in the day ahead. The USD also remains supported amid a recent slew of upbeat US economic data that continues to fuel hawkish expectations around a Federal Reserve (Fed) interest rate hike by the end of this year.
Data reported by ADP on Wednesday showed that the US private sector added 122,000 jobs in May, up from 105,000 in April and better than the consensus estimate for 117,000. Meanwhile, the ISM's Services Purchasing Managers Index (PMI) increased to 54.5 last month from 53.6 in April, beating the expected 53.8 reading.
The next in focus for Gold traders remains the US Nonfarm Payrolls (NFP) release on Friday, but the Mideast developments will keep playing a pivotal role across financial markets, including around the Greenback and Gold price.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades at $4,480.27. The metal remains under a bearish near-term bias as it holds below the 21-day simple moving average (SMA) at roughly $4,563, the 50-day SMA near $4,628, and the 100-day SMA around $4,798, keeping price entrenched beneath a stacked band of dynamic resistance. The 200-day SMA at about $4,427 sits below spot and, together with the previously broken downward trend-line zone around $4,356, provides broader downside context, while a Relative Strength Index (RSI) reading near 43 hints at subdued, slightly negative momentum rather than oversold stress.
On the topside, initial resistance is seen at the 21-day SMA around $4,563, with further barriers at the 50-day SMA near $4,628 and the 100-day SMA close to $4,798, where the broader bearish structure would face a more meaningful challenge. On the downside, the day’s open at $4,480 acts as a nearby pivot, ahead of firmer support at the 200-day SMA around $4,427, with the prior trend-line break area near $4,356 forming a deeper structural floor if selling pressure resumes.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
